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La Quinta Franchise Cost & Fees

Date of Incorporation: 2002

Franchising Since: 2003

Headquarters: Nevada

Country: U.S.

Description: La Quinta Lodging Facilities are high quality, mid-priced, limited-service lodging facilities that typically do not offer food or beverage services. They operate in accordance with a distinctive system for developing, operating and promoting lodging facilities.

Franchise Offer: La Quinta Franchising LLC is offering a franchise for the establishment and operation of a La Quinta Inn or a La Quinta Inn & Suites. Designs for La Quinta's prototypical facilities are for three-story structures. The total size of prototypical La Quinta Inns range from approximately 35,500 to 49,200 square feet and total size for prototypical La Quinta Inn & Suites range from approximately 36,600 to 54,400 square feet.

Financial Assistance: The franchisor does not offer any direct or indirect financing nor do they guarantee any note, lease or obligation.

Training and Assistance: Before the opening of a La Quinta Lodging Facility, the franchisee’s managers, front office personnel and certain other designated personnel for the Facility, as well as the Operating Partner must attend and successfully complete initial training programs. All positions may be required to attend annual re-training as the franchisor may designate. The initial training programs consist of both classroom training  and/or on-site training (held at the franchisee’s facility), covering such topics as La Quinta history, company values, corporate and operating guiding principles, compliance, marketing, guest satisfaction program, returns program and quality assurance, among other topics.

Territory: The franchisee will not receive an exclusive territory and they may face competition from other franchisees, from outlets that the franchisor owns or from other channels of distribution or competitive brands that the franchisor may control.

Term of Agreement and Renewal: The term of the franchise agreement is 20 years with an option to renew for an additional 10 years under the terms of the then current franchise agreement.

Obligations and Restrictions: The franchisee (or, if applicable, the Operating Partner) must actively participate in the management and supervision of the Facility. The franchisee’s facility must at all times be under the direct, on-premises supervision or the direct on-premises supervision of a general manager who has completed the required training programs to the franchisor’s satisfaction. The Facility must offer all products and services, including guest service programs, products the franchisor sells or endorses, customer loyalty programs, frequent traveler programs, and other programs and activities as the franchisor deems appropriate periodically.

Total Number of Units: 800 units

Investment Tables:

La Quinta Inn - New Construction 100 Rooms

Name of fee Low High
Guest Room Affiliation Fee Greater of $45,000 or $450 per guest room  
Market Study $10,000 $325,000
Land Will vary. Not included in the total  
Building Permit, Plans, Architect/ Engineering fees, Testing, Tap and Environmental Impact fees $250,000 $325,000
Building Construction $3,585,600 $4,860,000
Furniture, Fixtures and Equipment $756,000 $918,000
Computer System $22,000 $45,000
Telephone and other
Communications Equipment
$65,000 $75,000
Signs $37,800 $59,400
Opening Supplies $35,000 $55,000
Required Training Expenses $5,300     
Pre-Opening Expenses $98,000    $129,500
Review of Interior Design Package $0 $5,000
Additional Funds for Initial 3 Month Period $90,000 $121,000
Total, exclusive of real estate, insurance and interest     $4,999,700 $6,660,200
Total per Guest Room $49,997 $66,602

La Quinta Inn & Suites - New Construction 106 Rooms 

Name of fee Low High
Guest Room Affiliation Fee Greater of $45,000 or $450 per guest room ($47,700)     
Market Study $10,000 $17,000
Land Will vary. Not included in total.  
Building Permit, Plans, Architect/ Engineering Fees, Testing, Tap and Environ. Impact Fees $250,000 $325,000
Building Construction $4,327,344 $5,656,500
Furniture, Fixtures and Equipment $810,000 $1,026,000
Computer System $22,000 $45,000
Telephone and other
Communications Equipment
$83,000 $101,000
Signs $48,600 $70,200
Opening Supplies $35,000 $55,000
Required Training Expenses $5,300     
Pre-Opening Expenses $98,000 $129,500
Review of Interior Design Package $0 $5,000
Additional Funds for Initial 3 Month Period $90,000    $121,000
Total, exclusive of real estate, insurance and interest $5,826,944 $7,604,200
Total per Guest Room $54,971.17 $71,737.74

Ongoing Fees:

Name of fee Amount
Royalty and Operations Fee 4.0% of Gross Room Revenues from Opening Date through end of the 24th full calendar month; increasing to 4.5% in the 25th full calendar month through the Expiration Date.
Marketing Fee 2.5% of Gross Room Revenues
Reservations Fee 2% of Gross Room Revenues
Booking fees and Commissions Amounts the franchisor is charged.
Guest Loyalty Program Fee The cost of operating the franchisor’s frequent traveler program, Returns, will be funded by a charge to the franchisee’s Facility. That charge is currently calculated at 5% of the Returns member's room rate per night for the entire stay
Grand Opening Advertising Varies
Guest Satisfaction Program Cost to compensate a dissatisfied guest, plus, currently, a processing fee of $35, and an additional $50 if the franchisor has to resolve the matter.
Guaranteed Best Rate Program $35 plus the difference between the rate the franchisee originally charged and the competing website's rate.
Other Cooperative Marketing Programs No fees at the present time.
Marketing Materials Cost of materials.
Market Research Purchases Will vary.
Re-inspection Fee Reasonable fee (currently $250) plus wages, travel, lodging and meals
Annual Convention Fee The franchisee’s Facility will be charged a reasonable fee which will vary depending upon costs associated with the convention. Currently the fee (which includes one attendee) is estimated to be $850 to $1,500.
Additional Guest Room Affiliation fee The franchisor’s then-standard per room Affiliation Fee (currently $450 per room) multiplied by the number of additional guest rooms that the franchisee proposes to add.
Extension Fees Reasonable fee in accordance with the then-current policies.
Integration Training Currently, $1,000 per attendee. The franchisor may change this amount periodically
General Manager Field Training Program Currently, $3,500 plus travel expenses for entire property management staff and other designated personnel.
Other Training Programs Charges will be based upon level and complexity of program offered. Currently, charges typically range from $350 to $500 per person.
La Quinta Mentor Program If the franchisee elects to participate in this optional program, they will be responsible for all travel related expenses (including wages, lodging and meals) of the Mentor and Protégé.
Special Assistance Will vary by circumstances.
Securities Offering Will vary, but is not expected to exceed $25,000.
Audits Any deficiency found, plus interest, plus cost of audit if audit reveals an understatement of Gross Room Revenues of more than 3% of the amount due for the period or results from the franchisees failure to furnish reports or records.
Transfer Fees $7,500, plus up to $4,500 for a PIP
and any improvements required
by the PIP; and up to $5,000 for
training fees.
Indemnification Will vary under the circumstances.
Attorneys' Fees and Costs Will vary under the circumstances.
Liquidated Damages upon Opening Prior to Issuance of Opening Approval Notice $500 for each day the Facility is open without the franchisor’s approval, plus our costs.
Liquidated Damages upon Early Termination Lump sum payment
Casualty or Condemnation Fee Lump sum payment equal to Royalty Fees payable during the 12-months before termination.
Interest on Late Payments Highest contract rate of interest permitted by law, not to exceed 1.5% per month.
Insurance Will vary under circumstances.
Maintenance Costs Will vary under circumstances.
Fees to Inspect and Supervise Alternative Suppliers Will vary under circumstances.
Credit Card Interface Fee Currently, no separate fee.
Intranet or Extranet Hosting Fee Amount imposed periodically by the franchisor or a third party service provider in connection with hosting any intranet or extranet system
Web Site Fee Amount of development and hosting fees.
Termination Fee Lump sum
System Manual Replacement Fee Not to exceed $2,500
 

Date of FDD: 2009

The above information has been taken from the UFOC/FDD and online sources of La Quinta.

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